1
Question
Consider the following statements
1. Section 7 of the RBI Act provides power to the Government to give directions to the RBI
2. Contingency reserves of the RBI are resources aimed at dealing with black swan like events
Consider the following statements
1. Section 7 of the RBI Act provides power to the Government to give directions to the RBI
2. Contingency reserves of the RBI are resources aimed at dealing with black swan like events
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Solution
The correct option is C both 1 and 2
Contingency Reserves of the RBI is a specific provision meant for meeting unexpected and unforeseen contingencies.
These contigencies include depreciation in the value of securities, risks arising out of monetary/exchange rate policy operations, systemic risks and any risk arising on account of the special responsibilities enjoined upon the Reserve Bank.
The RBI Act 1934, Section 7 reads, "The central government may from time-to-time give such directions to the bank as it may, after consultation with the governor of the bank, consider necessary in the public interest"
Contingency Reserves of the RBI is a specific provision meant for meeting unexpected and unforeseen contingencies.
These contigencies include depreciation in the value of securities, risks arising out of monetary/exchange rate policy operations, systemic risks and any risk arising on account of the special responsibilities enjoined upon the Reserve Bank.
The RBI Act 1934, Section 7 reads, "The central government may from time-to-time give such directions to the bank as it may, after consultation with the governor of the bank, consider necessary in the public interest"
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